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Whirlpool, Maytag Ban High-End Item Discounts

May 20, 1999|CAROLINE E. MAYER | WASHINGTON POST

Two of the nation's leading appliance makers have warned retailers not to sell their top-of-the-line products at discounted prices--or their supplies will be cut off.

In the last few months, Whirlpool Corp. and Maytag Corp. independently sent letters to retailers saying the new, hard-nosed pricing policies were designed to increase sales, build brand-name loyalty for higher-priced washers and dishwashers and protect retailers that provide top-of-the-line customer service.

Both companies said their policies did not constitute illegal price fixing because they were being imposed unilaterally, without any agreement from or acknowledgment by retailers. As a result, they told retailers not to bother contacting the manufacturers to discuss the pricing plans.

These new policies come as manufacturers of all kinds of products try to grapple with how to hold prices firm in the face of increasing competition, including steep discounters that now sell over the Internet.

Retail experts say the unilateral pricing policies represent a new approach to restrain price competition. In the past, many manufacturers cut off advertising subsidies--and sometimes supplies--to stores that advertised prices lower than the suggested retail prices.

But now, some manufacturers believe that may not be enough. For some products, particularly high-tech goods such as electronics and cameras, consumers often spend a lot of time with full-service retailers to learn how a product works. Then, they go to a discounter, mail-order house or increasingly an Internet merchant, all of which can sell the products at reduced prices partly because they don't have the expense of customer service.

In the case of Whirlpool, the nation's largest appliance manufacturer, the policy applies to its KitchenAid division and to the latest line of stainless-steel dishwashers.

"KitchenAid will announce suggested resale prices on certain models and unilaterally refuse to sell those models to anyone that does not sell them at or above the [suggested] price," the company wrote retailers in a letter that described the new plan as "an exciting new policy."

The policy affects seven different models, with prices ranging from $429 to $999, although additional products may be added in the future.

Maytag, the nation's third-largest appliance maker, notified retailers of its new policy a month after Whirlpool, saying its "Unilateral Minimum Resale Price Policy" applies initially to the latest models of its popular Neptune washers, with minimum prices ranging from $549 to $1,119, but more products may be added later.

General Electric Co., the nation's second-largest appliance maker, does "not have a unilateral pricing policy today," said spokesman Terry Dunn. But he declined to say whether it would in the future: "We're in the midst of an economic war, and I'm not about to tell anything to my competitors."

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